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The New Role of CFOs: How to Evolve Into a Modern Middle Market Leader

Mary Roach
BILL, Senior Director, Product Marketing

The role of the CFO has evolved into more than just approving payments and reinforcing processes. Finance leaders are being pushed beyond traditional roles and responsibilities to drive everything from digital transformation to diversity efforts. At the same time, CFOs are facing tremendous talent challenges, exacerbated by the pandemic, that have either been reinforced or reduced by corporate culture. The modern CFO must evolve to continue identifying and extracting value from their teams to prepare for an even more volatile future. Here’s how.

Lean into initiatives that previously fell outside your scope.

A company’s finances impact departments across the organization and influence decisions made by numerous stakeholders. It’s no surprise that CFOs are increasingly dipping their toes into IT, HR, ESG, DEIB, and digital transformation. Each of these initiatives ladders back up to the bottom line in one way or another. The roles and responsibilities of a CFO are no longer confined to analyzing revenue and costs—they touch almost every facet of the business.

Resource allocation and support have become a particularly important function for senior finance leaders. The most successful companies optimize their human and financial capital to streamline processes without placing unnecessary stress on any one asset. CFOs of the future will know exactly where resources are most needed and which teams put them to the best use for a high return on investment.

Finance leaders are being called upon to manage changing expectations and take a holistic approach to every decision, something that only CEOs or board members may have been explicitly asked to do in past decades. The role of CFO is more hands-on and multi-faceted than ever before, and it is imperative that CFOs be able to communicate clearly, lead with confidence, and take a birds-eye view.

Put people first.

The pandemic and other external factors have created a new labor market in which employees are looking for much more than a paycheck. Companies with a great culture are more successful at attracting and retaining top talent because they consistently put people first. CFOs need to approach current and prospective employees with an appreciation for their unique circumstances. Regardless of hiring trends, it always pays to recognize an individual’s value and reward them for it.

One of the most effective ways to do this is by allowing employees to define happiness and fulfillment for themselves. Paving the way for personalized career paths and better benefits creates a more satisfied workforce willing to go the extra mile. A CFO can be instrumental in starting conversations about what’s working, what isn’t, and what else employees want from their workplace.

Create a culture of innovation.

Finance isn’t just about the bottom line—it’s about finding creative and transformative ways to run a business better. To this end, CFOs should be at the forefront of technology innovation and enablement as they continually reassess what it takes to optimize resources. Automating your accounts payable (AP) and accounts receivable (AR), for example, saves hours of manual work that can instead be dedicated to finding solutions for your company’s biggest problems.

A culture of problem solving or innovation can only emerge when employees have enough time to dedicate to it. Make sure everyone has at least a few unstructured hours built into their calendars for brainstorming or pursuing innovative ideas. Employees whose schedules are jam-packed with back-to-back meetings have no space to think about anything other than their current responsibilities. CFOs can kickstart the process by leading a short-term creative project to demonstrate what could happen at scale when the finance department embraces an innovative mindset.

Be selective and strategic about KPIs.

Key performance indicators (KPIs) help CFOs measure progress and mark success—as long as they’re carefully chosen. Not all KPIs are created equal, so finance leaders need to hone in on the five or six that are most impactful to an organization. Trying to juggle dozens simultaneously only leads to confusion and missed marks. Instead, begin with an end goal in mind and back solve for inputs or process needs to identify the most productive KPIs for your organization.

Once you’ve chosen a handful of helpful metrics, structure them hierarchically so it’s easy to cascade them down and create micro goals. Creating quarterly goals—within the finance department and the company as a whole—can help break seemingly insurmountable challenges into manageable steps spread out over the course of the year. Meeting those quarterly goals can inspire celebration and help boost motivation every few months.

Use data more effectively.

Data has become a buzzword across every department in every industry. CFOs in particular are responsible for pushing data to the front lines of the organization where decisions are being made. Critically evaluating the available information and selecting the most helpful nuggets to share with other senior executives is one of the newer roles and responsibilities of a CFO. It’s also among the most important responsibilities as companies increasingly look to leverage data into predictive information that can provide more value to clients and the organization at large. This requires regularly running improvement tests and making adjustments to ensure the finance department is consistently collecting and using data effectively.

One of the related key functions of a CFO is to translate data into actionable insights. For example, keeping an eye on the cost of capital can help measure your company’s environment, social, and governance (ESG) footprint, which is crucial for maintaining investor as well as client confidence. Another example is customer lifetime value (CLV). Tracking historical CLV can help inform which clients your company should pursue in the future and how much revenue you can expect from them.

Invest in automation.

Implementing back-office technology is an easy way for CFOs to realize efficiency gains and free up time for higher-value tasks that drive business growth. AI-enabled automation can completely transform how your finance department manages payments. From gaining access to more comprehensive data and optimizing workflows to reducing manual labor and minimizing errors, the benefits of investing in automation are numerous.

CFOs should start by automating just one function, such as AP or AR, then move in increments to automate other processes. This gives everyone plenty of time to adjust to a digital-first mindset and understand how automation can improve a finance department’s operations. Once you’ve secured buy-in from employees and established a process for implementing back-office technology, you’ll be in a better position to scale up.

CFOs of the Future

CFOs have a broad new mandate thanks to the increasing pace of change, a heightened emphasis on bringing finance functions up to speed, and greater visibility into other areas of the business. With more responsibilities than ever before, finance leaders need to take advantage of their most important assets: data, automation, and people. Keeping the above strategies in mind will go a long way in proving the finance team’s value and translating it into success.

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